Economic Evaluation of an Investment in Medical Websites and Medical Web-Based Services

22.1WTP versus Human Capital Approach and QALYs

Ryan M. et al. (1997) and Ryan M. and Hughes J. (1997) supported the opinion that the most obvious way market where the analyst/ researcher can take directly the WTP and the utility that the participants expect to gain from the marketed commodity, is the auction market. Although Ryan’s was correct it cannot be generalised because all market are not working in an auction setting and all the goods and services are marketed. Thus the older approach of Davis (1963), who the first to propose a survey setting in order the researcher/analyst to obtain the WTP of the participants towards a specific good, service or change, is considered a more broadly applicable and popular approach. The survey setting to obtain WTP is often referred to as contingent valuation.

Comparing WTP approach with the Human Capital Approach, Johannesson M. (1996) supported the opinion that in the healthcare field economic evaluations were based at their first steps on the Human-Capital approach according to which the value of the improvements in healthcare interventions is defined as “the decreased in consumption in healthcare and the increased production”. In his work, Johannesson (1995; 1996a; 1996b) has shown that the human-capital approach used to estimate the value of the improvement in healthcare programs/services/interventions is not a reliable indicator of the WTP that the public have towards that improvement. Although the Human Capital approach does not reflect the individual’s WTP, Johannesson stated that in systems with public or private insurance that is not taken into account as an estimate of the expected costs this approach can produce a valid estimate of these costs since it uses the difference between the increase in consumption and the increase in production to estimate the increase in survival rates as a direct result of the improvement in healthcare.

With the human capital approach heavily criticised as an evaluation approach to assess the value of the healthcare outcomes, was replaced by Cost-Benefit and Cost- Effectiveness and Cost-Utility analysis that are based more on QALYs and WTP concepts.

Bala et al. (1998) compared these two approaches. The QALYs approach tries to transform the outcomes of the improvements/changes in the healthcare interventions into a specific duration and quality of life (Bala et al. 1998; Hammit, 2002). The core difference between the two approaches is that QALYs and Cost Effectiveness analysis are majorly used to assess majorly the effectiveness of clinical outcomes while WTP can be used on assessing the value from the health processes themselves rather than only from their outcomes (Ryan et al., 1997; Ryan and Hughes, 1997). Moreover, WTP transforms the outcomes of the improvement in the healthcare interventions into a universal monetary value much easier to be used by the evaluation actors. While QALYs first estimates various weights for different healthcare states and then combines these weights in order to end up to a final value for the healthcare intervention the WTP approach estimates directly the final value by asking the preference of the patients/users.

Furthermore, Bala et al. (1998) states that QALYs approach follows specific restrictions and assumptions in order to be considered as a utility measures (Liljas et al., 2008; Liljas and Lindgren, 2001) while WTP is an assumption-free approach although the validity of its results are questionable concerning how accurately estimates the real WTP of the public. The QALYs in order to present an accurate impression of the utility they must follow the conditions below (Hammit, 2002):

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  There must be mutual utility independence which refers to the fact that “preferences between lotteries on health states do not depend on the remaining years of life, keeping the lifespan constant or preferences between lotteries on lifespan do not depend on health state” (Hammit J., 2002).
  
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  The percentage of the rest of the duration of his life that a patient is willing to sacrifice to move from a healthcare state to another does not depend on the remaining lifespan
  
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  If a healthcare state is constant then patients are biased and prefer choices that enlarge their lifespan.
  
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  The choice that a patient makes in a specific period, expressing their preference, does not depend on their healthcare status in other periods.
  

To conclude since the Human Capital approach was heavily criticized for its drawbacks and QALYs are more efficient to measure the value of healthcare interventions rather than the value or the “benefit" hidden behind intangible services that are offered, WTP approach was considered the most appropriate for achieving the main objectives of this study.